Schroder Investment: Strong El Nio Phenomenon May Double Global Food Prices.

The US-Iran agreement may help alleviate global inflationary pressures by restoring the supply of energy and fertilizers. However, the El Nio weather pattern poses a significant threat. David Rees of Schroder Investment stated that if past correlations hold, a strong El Nio event could mean food prices worldwide doubling in the next year or so. Previous El Nio events disrupted water levels in the Panama Canal, hindered hydroelectric power generation, and triggered floods and droughts. This time, the El Nio event will be compounded by factors already predicting future food price increases: global extreme temperatures and disruptions in fertilizer supply due to conflicts in the Middle East. The war also stimulates demand for biofuels, increasing the use of sugar, corn, and soybean oil. Rees said that all of these factors could exacerbate the stagflation trend emerging in the global economy.